Washington DC, January 3, 2017—A 2013 memo written by attorneys in the Consumer Law Section from the
California Attorney General’s office is raising new concerns about the track record of OneWest Bank, and the
ethics of its former CEO, Steve Mnuchin, who has been nominated to be Treasury Secretary by President Elect
Donald Trump. David Dayen first reported on the memo earlier today in an article in the Intercept.
The memo is based on a preliminary investigation by staff at the Attorney General’s office and was triggered by
an earlier settlement by the bank with its banking regulator, “together with consumer complaints and the large
volume of foreclosures conducted by OneWest.”
The memo focused on a number of fraudulent practices that OneWest was alleged to have engaged in,
1) Backdated foreclosure notices of default and other documents and had them notarized in order to “paper over
misrepresentations, including cases the attorneys identified where bank staff had backdated documents to dates
prior to OneWest’s existence. In the case of the notices of default, the Attorney General staff asserts that if
OneWest had corrected these errors, this would have delayed the foreclosure process. In addition, OneWest filed
these foreclosure notices with country recorders throughout the State which could subject OneWest to a felony
charge under state law.
2) OneWest made and directed unlawful credit bids at foreclosure sales. According to the Attorney General staff,
unlawful credit bids may “freeze out other potential bidders (which could include a borrower or his family).”
3) Due to the unlawful credit bidding OneWest claimed an exemption from the applicable city and county
transfer taxes and no tax was paid.
4) Performed other acts in the foreclosure process without valid legal authority; and
5) OneWest Trustees, acting on behalf of OneWest, failed to provide due process to families by speeding up the
foreclosure process and timeline.
Impact on Homeowners: The memos of the author explain what the bank’s alleged practices meant for
homeowners facing foreclosure:
“As reflected in the examples cited above and appended hereto, in many instances, OneWest’s false filings and
unauthorized conduct in the course of the foreclosure process harmed homeowners by denying them timely and
important information about their foreclosures and potentially shortening the amount of time they had available
to find a way to become current on their mortgage obligations.”
Consumer advocates expressed outrage and urged a full investigation prior to any votes on Mr. Mnuchin’s
nomination later this month.
“Where’s there’s smoke, there’s fire, and the American people deserve a full explanation of these serious charges
of fraud. Mr. Mnuchin and OneWest Bank need to turn over all of the evidence they previously obstructed so
that their banking regulators can conduct a thorough investigation into these serious charges prior to any
hearings about Mr. Mnuchin serving as our next Treasury Secretary. If Mr. Mnuchin’s bank wasn’t engaged in
illegal behavior, why did they try and obstruct the Attorney General’s staff?” asks Paulina Gonzalez, executive
director of the California Reinvestment Coalition.
The authors of the memo recommended that the Attorney General authorize a civil enforcement action against
the bank, which did not happen. In citing challenges with filing the case, the authors of the memo cite concerns
about federal bank regulators pre-empting their authority. OneWest and Wells Fargo have both raised preemption
as defenses in legal cases related to the banks not complying with California’s Homeowner Bill of
Rights law. The attorney general had previously filed amicus briefs arguing against OneWest’s position that it
was not subject to the Homeowner Bill of Rights.
Additional Context: Senators are missing key information about Mr. Mnuchin, OneWest Bank, and Financial
As part of its earlier merger with CIT Group, consumer advocates had asked for more information about
OneWest’s track record which the bank refused to provide, including information about:
1) Total number of national foreclosures conducted by OneWest Bank and Financial Freedom (reverse
mortgages) after Mr. Mnuchin and his group of investors bought the failed IndyMac, First Federal, and La Jolla
2) HUD OIG Investigation: CIT Group, which acquired OneWest Bank in 2015, disclosed to investors that it had
received subpoenas from the Office of the Inspector General at HUD related to Financial Freedom’s servicing of
reverse mortgage loans. The investigation appears to be ongoing, and likely covers a timespan when Mr.
Mnuchin was at the helm of OneWest.
3) Modification and foreclosure data: While a spokesperson for Mr. Mnuchin suggested to the Washington Post
that OneWest had made “over 101,000 modification offers,” advocates question how many of those
modifications provided substantial enough payment relief that a homeowner could retain the home, and how
many modified loans subsequently went into default, especially if the original modification didn’t provide a
sustainable solution for the homeowner. Because 2/3 of OneWest foreclosures in California occurred in majority
minority communities, advocates also suggest the bank should provide data about the extent to which
homeowners of color received sustainable modifications, data which the bank likely already provided to the
4) Settlements and Court Cases: During the past six years, OneWest Bank and its subsidiary, Financial Freedom,
have lost multiple lawsuits and/or agreed to settlements with homeowners for illegal lending, servicing, and
foreclosure practices. However, the bank has never provided a comprehensive picture of these lawsuits and
settlements which could help senators better understand Mr. Mnuchin’s leadership at the bank.
Example OneWest Settlement: OneWest Bank agreed to pay Greg and Irene Rigali, from San Luis Obispo,
California a seven figure settlement after the bank foreclosed on the homeowners at the same time the
homeowners were attempting to obtain a modification, a practice known as “dual tracking.” For more, see:
CalCoastNews: “OneWest Bank pays 7 figures in mortgage fraud case.”